Bharti Airtel today said that it has completed (pdf) the sale of 10.3% stake in tower asset firm Bharti Infratel worth ~$951.6 million (Rs 6,193.9 crore). The buyers include a consortium of funds advised by private equity firm KKR and Canada Pension Plan Investment Board. The transaction was completed as a “secondary sale of over 190 million shares” from Bharti Infratel at a price of Rs 325 per share.
Airtel will primarily use the proceeds from the stake sale for cutting its debt. Bharti Airtel now owns a controlling stake of 61.7% in Bharti Infratel. The stake sale comes after Airtel decided that it won’t be selling a controlling stake in Bharti Infratel as announced in October last year. Airtel’s board instead approved to free up 400 million equity shares in Bharti Infratel to potential investors. Note that a Mint report in December last year said that asset management company Brookfield submitted the highest bid for 51% stake in Airtel, although the sale may have been nullified after the board’s decision.
The current stake sale also comes at a time when the Indian telecom industry has turned fiercely competitive with smaller telcos either looking for an exit or merging with their bigger counterparts. Airtel, Idea and Vodafone have also lost a considerable number of subscribers after the launch of Reliance Jio which is currently offering free calls and data.
Tower Sale in Africa to cut debt
Note that Bharti Airtel had completed a number of deals with multiple buyers, primarily to cut debt and bring down operating costs in its foreign operations as well. Last year in March, Airtel entered into an agreement with American Tower Corporation (ATC) to sell around 1,350 towers of its towers to ATC in Tanzania through its subsidiary Airtel Tanzania to cut down debt in its Africa operations. Apart from this Airtel has multiple tower sale deals in the past few years to cut debt:
-In September 2015, IHS Holding said that it had completed sale and lease-back of 949 towers from Airtel Zambia in Zambia. While signing the deal in 2014, Airtel had mentioned that te deal was primarily put in place to cut debt.
-In November 2014, Airtel said that it was planning to sell 4,800 towers to American Tower Corporation in Nigeria in an effort to cut its debt.
-In September 2014, a Money Control report stated that Airtel had signed a 10-year contract to sell and lease back over 3500 towers to Eaton Towers in 6 countries across Africa.
-In July 2014, Airtel had signed an agreement to sell and lease back over 3,100 towers in four countries across Africa to the telecom tower operator Helios Towers Africa